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As the European Union struggles for a solution to its debt crisis, economists and other observers are tussling over the extent of possible contagion.

Will Europe's problems throw the U.S. into a recession?

Gerald O'Driscoll Jr.

Senior fellow, the Cato Institute "It's 50-50. The U.S. is slowly picking up momentum but also being dragged down by the problems in Europe. Some expect a Lehman kind of liquidity event before Christmas or in the beginning of the year."

Allan Meltzer

Professor, Carnegie Mellon University "Probably not. It will hurt our exports, but Europe is only 20% of the total. If Asian exports continue to grow, the U.S. will continue its transition from a consumption-led to an export-led economy."

Andrew Milligan

Global strategist, Standard Life Investments "It would take a major error of judgment by Merkel, Monti, Sarkozy and Draghi to create a financial crisis as large as, say, Lehman—and now, only an event that big would push the U.S. back into recession."

Walker Todd

Economic consultant "The recession would happen only if we try to refinance the whole European banking system through the U.S. Federal Reserve, which is what we appear to be doing."

Last Week: Review

Euro Muddle Still Muddled

A proposal to more closely integrate European Union nations fiscally won support from 26 of the 27 members, with three saying they needed approval from their parliaments. The U.K is opposed, on fears it would be surrendering too much sovereignty. Meanwhile, a plan to have European central banks lend 200 billion euros to the International Monetary Fund for redistribution to troubled European economies gained strength—although Mario Draghi, the European Central Bank's chief, is against it. And Standard & Poor's put the sovereign debt of 15 euro-zone countries on CreditWatch/Negative for possible downgrade. (See European Trader.)

Betting the Farm

Ex-Sen. Jon Corzine told a House committee that he doesn't know what happened to the $1.2 billion in customer funds reported missing after the bankruptcy filing of
MF Global Holdings,
of which Corzine was CEO until he quit on Nov. 4. He defended the prudence of the firm's bad bet on European debt.

More Horse Trading

A House hearing focused on new rules to prevent members of Congress and their aides from trading securities on nonpublic information stalled in the course of legislative work. A Securities and Exchange Commission official testified in support of tougher prohibitions. But House Financial Services Committee Chairman Spencer Bachus (R., Ala.) postponed the vote, saying that more time was needed to "study this issue."

A Pink Christmas

Citigroup plans to lay off about 4,500 employees over the next few quarters, and take roughly $400 million in related charges. Other banks have downsized more aggressively, in the face of Europe's debt woes and proprietary-trading curbs.

Squeaking In

Russian voters rebuked Vladimir Putin's political party, United Russia, which emerged from Sunday's election claiming a bare majority of parliamentary seats. And that was after reported voting fraud that election monitors said had tilted results in favor of the ruling party.

In Brief:

• Found by NASA: a planet, 600 light years away, circling a Sun-like star and having some of the characteristics that make life possible on Earth.

• Big banks would stop using credit ratings as the risk measure of assets like mortgage-backed securities, under a government proposal announced Wednesday.

• New York plans an income-tax surcharge on annual incomes above $2 million, starting in 2012.

• Congress plans a hearing on why a post-crash-test fire in a Chevrolet Volt's battery pack wasn't reported by federal testers more quickly.